Why Your Solar-Powered Home Is Still Light Years Away

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A worker stands near solar panels, manufactured by Sharp Corp., at the SoftBank Yaita Solar Park operated by SB Energy Corp. in Yaita City, Tochigi Prefecture, Japan, on Tuesday, Aug. 20, 2013. The 3 megawatt solar power station is scheduled to start operations from Aug. 23. Photographer: Tomohiro Ohsumi/Bloomberg via Getty Images
Tomohiro Ohsumi/Bloomberg via Getty Images
For years, solar power has been long on promise, but short on delivery: Photovoltaic cells -- the building blocks of the panels that you sometimes see on houses -- were available, but the high cost of PV-cell installation and their low efficiency meant that, watt for watt, solar power was much more expensive than that from fossil fuels. For families looking to get off the grid, the economic factor was a big hindrance.

But, as Mother Jones recently reported, that equation is in the process of changing. PV cells are becoming both more efficient and less expensive, a recipe for cheaper electricity. Unfortunately, the "soft" costs -- all the assorted taxes, permitting and installation costs -- have remained fairly steady. Currently, the solar panels and the assorted hardware comprise less than a third of the cost of installation; the rest goes to labor, permits, taxes, overhead, supply chain and assorted other charges.

To get an idea of how much all of these soft costs impact solar usage, it's worth comparing the U.S. to Germany, a country that is widely regarded as the gold standard for solar use. In Germany, PV cells cost almost the same as in the U.S., and hardware costs are about half as much. The big jump, however, comes in soft costs, which are huge in the U.S., making the price of American solar watts nearly three times the price of German ones.

Ultimately, it seems, the biggest barrier for solar energy may not lie in green cells but in red tape.

Bruce Watson is DailyFinance's Savings Editor. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.


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11 Comments

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terpmarty

Too little, too late. Solyndra already took the $500 million and ran.

August 21 2013 at 7:55 PM Report abuse rate up rate down Reply
Sonny

What???????? 3 years ago I was paid a $20.000 incentive by the state of Florida to put in a $24,000 5 KW system, leaving my costs to be only $4,000. that included permitting and everything. I used German Mage panels that came with a 30 year guarantee, with Enphase microinverters. I have save about $100 a month on my electricity, which means in 4 months, my system will be paid for.

August 21 2013 at 3:34 PM Report abuse rate up rate down Reply
rnoches

Please pardon my French, but it is "A crying ass shame" that when politics gets its grubby little paws involved, costs seem to skyrocket. Solar panels when eventually perfected offer a considerable relief to voting citizens. However if all kinds of taxes get tossed into the fray then cost of installing the new technology could be out of reach for many perspective buyers.

August 21 2013 at 3:27 PM Report abuse +1 rate up rate down Reply
toddpugz

A light-year is a measurement of distance, not time.

August 21 2013 at 2:13 PM Report abuse +3 rate up rate down Reply
Barry

Is anyone familiar with Solar3d?
Is it actually the next gen PV company, or just smoke?

August 21 2013 at 2:09 PM Report abuse rate up rate down Reply
Ambudz

The first rule in any corporation is to limit competition.

August 21 2013 at 1:37 PM Report abuse rate up rate down Reply
1 reply to Ambudz's comment
ectullis

Like the Chinese?

August 21 2013 at 2:34 PM Report abuse +1 rate up rate down Reply
domegrp

The utility companies still want you to buy power from them, so some of the advantages will likely be countered by them. The idea of living off the grid is something they don't want. They are building huge solar plants, at least out west here, in order to follow the regulations and laws and have you buy their renewable energy. Still it makes sense to use solar to bring down your utility bills. I guess it depends on where you live.

August 21 2013 at 11:27 AM Report abuse rate up rate down Reply
mmcdona484

Solar has some problems that need to be resolved:
1. Solar Cells subject to weather get damaged. Much like a headlight lens that gets cloudy with aged.
2. Solar Cells are so large that you cannot move them to follow the suns path.
3. Batteries are needed to store this energy and current technology is expensive.
4. Cost of installation and materials cannot be recovered due to short life of these units.
Basically these issues need to be resolved before these become the way of the future. A way to do this would be to use the generating materials in layers of paint on a house so that the energy can be absorbed from several points while not being displayed and causing an eyesore that current panels cause.

August 21 2013 at 10:38 AM Report abuse +2 rate up rate down Reply
Gumby

Inconventional truth, I mean... soorry!

August 21 2013 at 10:15 AM Report abuse -3 rate up rate down Reply
Gumby

Hey short sellers, back up your trucks on fossil fuel stocks now! There is no future in fossil fuel! It aint growing at all and will decline in production not because of depleted resources but the damn conventional truth!

August 21 2013 at 10:15 AM Report abuse -1 rate up rate down Reply